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SM Brokerage Must Pay $6.2 Million for Investment Losses

 

November 25, 2013



An arbitration panel has ordered that Santa Monica, Calif., broker-dealer National Planning Corporation pay nearly $6.2 million to two investors for losses they suffered in real-estate-related investments.

Ronnie and Stacy Erickson, individually and on behalf of related trusts, accused National Planning Corporation of breach of fiduciary duty and negligence, among other claims, according to a ruling by a Financial Industry Regulatory Authority arbitration panel.

Their broker at National Planning Corporation recommended several unsuitable transactions in real-estate investment trusts and real-estate investments involving Waterway Holdings Group LLC, the investors alleged. According to the panel’s ruling, they said they also had to pay outstanding loans on mortgages on the real-estate investments in order to prevent foreclosure.

The investors alleged that their broker “manipulated them into undertaking significant debt, paying millions of dollars in cash that cannot be recovered, and liquidating, annuitizing, and structuring their investment assets earmarked for retirement to pay the staggering debt obligations related to the real estate investment recommendations,” the ruling said.

In May, the broker filed for bankruptcy, staying all claims, according to the arbitration ruling. The panel awarded the investors and their related trusts nearly $6.2 million in compensatory damages, or about half what they had requested in their original claim.

Attorneys for the investors and the brokerage firm didn’t immediately return requests for comment. -WSJ

 

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